International Trade

As part of an ongoing review of government efforts to help firms protect their intellectual property rights in international trade, GAO surveyed firms to obtain their perspectives on the Customs Service's ability to stop counterfeit and infringing goods from entering the country.

GAO noted that firms use two methods to obtain Customs' assistance in protecting their patents, trademarks, and copyrights, including: (1) recordation, in which owners of trademarks and copyrights that are already registered with the federal government record their rights directly with Customs; and (2) exclusion orders, which patent owners obtain from the International Trade Commission after 12 to 18 months of adversarial proceedings under section 337 of the Tariff Act of 1930. GAO found that, of the firms responding to the recordation survey: (1) 80 percent reported that counterfeit and infringing goods continued to enter the country after recordation; (2) over 50 percent reported that the value of counterfeit and infringing imports remained the same after recordation and 31 percent reported that the value increased; (3) 85 percent reported that these imports damaged their sales to some extent; and (4) 80 percent reported that these imports appreciably damaged consumer confidence in their products. GAO also found that, of the firms responding to the section 337 survey: (1) 65 percent reported that counterfeit and infringing goods continued to enter the country; (2) 71 percent reported a substantial decrease in the value of counterfeit and infringing imports; and (3) 75 percent reported that these imports damaged their sales. Survey respondents generally held Customs' inspection staff in high regard and felt that Customs' lack of available staff was the main limitation on its ability to protect intellectual property rights.